Sri Vijaya Puram, June 27, The Board of Directors of the Andaman and Nicobar State Cooperative Bank (ANSCB) will convene on June 30 to review the status of a widening investigation into alleged financial misconduct in the bank’s lending operations. The meeting comes as a multi-agency probe, involving local police, cooperative regulators, and forensic teams, gathers momentum, with sources estimating the scale of irregularities at approximately ₹147 crore.
According to sources familiar with the matter, the board, comprising several newly elected members, has formally sought a detailed report from ANSCB Managing Director K. Murugan. The report will cover alleged discrepancies in the bank’s books of accounts and lending practices, which are now at the heart of a criminal investigation being led by the Special Investigation Unit under IPS officer Jitendra Meena.
The FIR, registered on May 15, names over 200 individuals, including senior bank officials, local businessmen, and beneficiaries of high-value loans. It follows weeks of internal and external scrutiny, and has reportedly triggered a series of summoning orders for cross-examination. “The accused are being called for questioning which typically lasts from morning to late evening,” a person with knowledge of the investigation told The Wave Andaman.
The alleged modus operandi under scrutiny includes “evergreening” of loans, where new, inflated loan disbursals were allegedly used to repay earlier defaults in order to conceal non-performing assets (NPAs). Police are also examining whether borrowers were coerced into accepting loan amounts larger than required, with excess funds allegedly siphoned off to shell entities linked to insiders.
Widening Scope of Multi-Agency Investigation
The criminal inquiry formally intensified on May 17, when a multi-agency search operation began at ANSCB’s headquarters in Sri Vijaya Puram. Over the next four days, teams from the Central Crime Station (CCS), the Registrar of Cooperative Societies, and Aberdeen Police carried out joint inspections of the bank’s financial records, both physical and digital.
Sources told The Wave Andaman that investigators were focusing on loan processing trails, transaction logs, and internal compliance protocols. Access to sensitive files, including site verification reports, borrower credit histories, and board approval documents, was placed under strict scrutiny.
“The scope of the probe appears broad, with multiple administrative layers and even branch-level operations now under the scanner,” a senior official said. So far, there have been no arrests or asset seizures, and the specific legal classification of the suspected offense remains undisclosed.
The investigation also encompasses the bank’s role in implementing government-backed loan and subsidy schemes. ANSCB has historically played a crucial role in delivering rural credit, especially to farmers, self-help groups, and micro-enterprises across the archipelago. Regulators are now exploring whether irregularities were isolated to specific branches or part of a systemic pattern.
Public Confidence Wanes Amid Reassurances
The scandal has had immediate consequences on depositor sentiment. In early June, the bank was forced to issue a formal statement following reports of panic withdrawals in several towns. K. Murugan, in a June 3 public address, reassured customers that the bank’s financials were sound, disclosing an unaudited net profit of ₹7.61 crore for the current year and ₹7.45 crore for FY24. He also stated that total deposits stood at ₹1,336 crore, with investments parked in government securities, bank fixed deposits, and liquid assets.
Yet these reassurances have failed to stem the tide. In Diglipur, Rangat, Mayabunder, and Billiground, long queues were seen outside bank branches, as residents sought to close fixed deposits or shift savings to nationalised or private-sector banks. “People are unsettled, especially those with long-term deposits. They’re asking more questions than usual,” said a Diglipur branch employee, requesting anonymity.
Political Underpinnings and Alleged Governance Failures
The FIR filed by the Deputy Registrar of Cooperative Societies names Kuldeep Rai Sharma, ANSCB’s Vice Chairman and former Congress MP, along with other board members and senior bank staff. The complaint cites alleged violations of lending protocols, including bypassing the loan screening committee, overlooking CIBIL reports, and issuing advances with incomplete or missing documentation. Investigators are now reviewing whether site verification forms were fraudulently cleared without branch-level checks.
These developments add to longstanding criticism that cooperative institutions in the Andaman and Nicobar Islands operate in a regulatory grey zone, with overlapping mandates between the local administration and central oversight agencies like the Reserve Bank of India (RBI) and NABARD. The delay in board elections and questions over political interference have only deepened mistrust.
As the June 30 board meeting approaches, pressure is mounting on the bank’s leadership to initiate internal accountability measures. However, with no arrests made and the full extent of alleged wrongdoing still unclear, restoring depositor confidence may prove to be the greater challenge.
